June 2017
This Statement has been prepared by Sheffield City Region Combined Authority (the Authority) to set out the governance policy for the South Yorkshire Passenger Transport Pension Fund (the Fund), in accordance with Regulation 31 of the Local Government Pension Scheme (Administration) Regulations 2008 (as amended).
1. Introduction
1.1 The Local Government Pension Scheme (Administration) Regulations 2008 provide the statutory framework which requires the Authority to prepare a Governance Compliance Statement. In accordance with stated requirements the statement can be summarised as follows:
1. After consultation with such persons as the Authority considers appropriate they shall prepare and publish a written statement setting out -
a) whether they delegate their function or part of their function to a committee, sub-committee or officer,
b) if they so delegate –
(i) the terms, structure and operational procedures of the delegation;
(ii) the frequency of any committee or sub-committee meetings; (iii) whether such a committee or sub-committee includes
representatives of employing authorities (including authorities which are not Scheme employers) or members, and, if so, whether those representatives have voting rights;
c) the extent to which a delegation, or the absence of a delegation, complies with guidance given by the Secretary of State and, to the extent that it does not so comply, the reasons for not complying.
2. The statement must be revised and published following a material change in policy.
2. Governance of the South Yorkshire Passenger Transport Pension Fund
2.1 The Authority as a whole carries the strategic responsibilities of an administering authority.
2.2 The Authority has established a Committee to formulate and implement detailed policy.
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The Committee meets as and when required but at least four times a year. Its objective and terms of reference are -
To
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effective andandeconomiceconomicserviceservice andandttoo obtainobtainthethe bestbest financialfinancialreturnreturnininorderorderthatthat thethe Fund
Fundcancanmeetmeetbothbothitsitsimmediateimmediateandandlong-termlong-termliabilitiesliabilities..
In connection with this:
Determine strategies to determine and implement the overall strategy of the Fund
Set investment policy and ensure that all investment decisions are made in accordance with it and publish and maintain the appropriate Statement of Investment Principles
Commission the triennial actuarial valuation (and interim valuations if required) and arising from this set the contribution level for the employer within the Scheme
Appoint the necessary internal and external advisors including the actuary, external investment managers, independent investment advisor and pensions administration service provider
Set and monitor targets for the cost effective and efficient performance of its contractors and advisors
Ensure that the Authority communicates and promotes itself effectively with all Scheme members and the employer
Ensure that adequate and effective controls exist to ensure good governance and compliance with legal standards and best industry practice
Develop the Committee’s work programme and ensure that all Members are properly and appropriately trained
Formulate, review and publish Strategies and Policies on Administering Authority discretions
Determine, publish and review a: o Funding Strategy
o Governance Policy
o Communications Strategy
Determine and maintain an appeals procedure under the Scheme’s IDRP
Publish and keep under review corporate governance/socially responsible investment policies and voting guidelines
Determine Membership of pressure groups etc e.g. LAPFF
Respond, on behalf of the Authority, to Department of Communities and Local Government (DCLG) and other government or industry consultation exercises, notifying the Authority of any major issues
3. Representation
3.1 The Committee‘s membership is determined by the Authority.
3.2 The Committee has full delegated powers. Representatives from the employer and trades unions can attend Committee meetings but do not have voting rights. 3.3 In accordance with the Public Service Pensions Act 2013 and the LGPS
(Amendment) (Governance) Regulations 2015 the Authority has established a Local Pension Board.
4. Reasons for Current Representation
4.1 Myners’ first Principle states that decisions should only be taken by persons or organisations with the skills, information and resources necessary to take them effectively. Where trustees elect to take investment decisions, they must have sufficient expertise and appropriate training to be able to evaluate critically any advice they take. All members of the Committee are required to undergo the Local Government Employers’ fundamentals training and are exposed, on the occasions that they review investment performance and strategy, to presentations on topical issues, such as hedge funds, private equity, bonds etc. 4.2 In the CIPFA guidelines relating to the governance regulations, it states that …
“As things stand, Section 7 of the Superannuation Act 1972 does not permit the Secretary for State to make regulations which impact on the constitution and membership of local authority committees. The ODPM has advised that there are no plans at present to amend local government law to change the provision regarding the composition of investment or pension committees. This must be a matter for individual fund administering authorities to consider, reflecting local circumstances and choice. But in exercising that choice, the ODPM advise it is important that authorities recognise the desirability of achieving an effective and comprehensive level of stakeholder representation within the LGPS nationally.
The challenge for pension fund panels is to find ways of engaging those people with an interest in decisions made without undermining the operation of the panel. The Funding Strategy Statements will encourage greater emphasis on consultation and if local authority employers contributing to the fund do not have representation on the panel or committee, be it voting or non voting, then there would be a need to demonstrate they were being engaged in other ways. For example by the holding of
Bi-lateral discussions, or similar forums, involving employers and other stakeholders
An annual general meeting for all employers;
A triennial meeting between all employers and the actuary to discuss the results of the actuarial valuation”
4.3 Formal statutory responsibility for the LGPS and Fund investment remains with the administering authority that is answerable for the effective and prudent management of the scheme. The Myners Principles, the CIPFA guidance and the statutory position have led the Authority to conclude that current representation provides the appropriate balance between accountability and inclusion.
5. Arrangements Outside of Formal Governance
5.1 The Authority is committed to inclusion of all stakeholders in consultation and communication outside of the formal governance arrangements. The Authority publishes an annual Fund Report and regular newsletters.
5.2 The Authority provides the employer with a guide to the Scheme. In addition, regular newsletters are produced to keep the employer up to date with scheme developments and administration issues. These are provided via our dedicated employers’ website and can also be made available in hard copy. The employer’s attention is drawn to LGPC Circulars whenever these are published so that they can view the national perspective as well as the local view.
6. Comparison Against “Best Practice” Principles
6.1 The Authority is required to make a statement as to the extent to which a delegation, or the absence of a delegation, complies with guidance given by the Secretary of State and, to the extent that it does not so comply, the reasons for not complying.
6.2 The appendix to this document provides that statement, setting out against each of the Principles the extent of compliance supported by further explanation or comments where further action is to be considered.